East European Politics and Societies and Cultures Volume XX Number X Month 201X 1–29 © 2019 SAGE Publications 10.1177/0888325419844828 journals.sagepub.com/home/eep hosted at http://online.sagepub.com Innovation, Financial Culture, and the Social-Economic Environment of SMEs in Hungary Ágnes Győri Institute for Sociology, Centre for Social Sciences, Hungarian Academy of Sciences Ágnes Czakó Gergely Horzsa Institute of Sociology and Social Policy, Corvinus University of Budapest Despite the numerous pieces of research that have been undertaken to aid understand- ing of the innovative activities of small- and medium-sized enterprises (SMEs), only a few have dealt with the interaction between innovation activity and the finance-related attitudes, literacy, and knowledge (competencies) of these companies. The current research focuses on specific aspects of the innovation activities of SMEs in a post- communist society (Hungary) by taking into consideration elements of both entrepre- neurial financial culture and the social-economic environment. Our analysis is based on a national representative survey, 2017. Results show that the presence of a creative financial culture, and the grounding of management decisions correlate with company innovation. We found that subsidies as external financial sources contribute to a larger extent to the innovation activities of SMEs than other external and internal financial resources. Moreover, the study explores the effects of some economic and social competition-related factors. Keywords: SMEs; innovation; financial culture; financial literacy; corporate finan- cial resources; social-economic environment Introduction In recent decades, the innovation activities of enterprises have been the subject of both theoretical and empirical investigations. Among these pieces of research that have analysed firm-level innovation, one major topic is the issue of cooperation between firms and the actors who serve and support such activities. Based on this research, a good understanding of the positive effects of cooperation and networking on innovation, and the competitiveness of enterprises and wider national economies has been developed. 1 Previous researches, often based on Community Innovation Survey data 2 into innovation in developed or developing economies has concen- trated primarily on the innovation behaviour of large and multinational companies, 844828EEP XX X 10.1177/0888325419844828East European Politics and SocietiesGyőri et al. / Innovation, Financial Culture research-article 2019